On Thursday, the U.S Census Bureau will release their monthly retail sales report, a thorough examination of consumer demand for retail goods and fast food services. Economists surveyed by Bloomberg anticipate a 0.6% increase in sales for the month of March.


Here’s what people should watch for in this Thursday’s 8:30AM report:


Gas Sales Will Dominate the Report 

Gas prices have increased a whopping 26.6% since the start of the year. The national average for a gallon is now $4.32. While inflation has been a culprit for this, the Russian invasion in Ukraine has also worked to push up prices, as Biden banned Russian imports of crude oil.
Economists expect that this industry will experience the largest growth in sales for the month of March, even if some consumers chose to ditch this staple for walking. 
“So even if people drove less (it's not clear they did), because prices went up so much, the spending at gasoline stations probably will have gone up significantly when we see the report,” said David William Berson, Senior VP and Chief Economist at Nationwide Insurance.

Raised Interest Rates Won’t Have Much Of An Impact…Yet

Last month, the Federal Reserve approved their first interest rate hike in over three years. A 0.25% increase was put in place in an attempt to slow inflation and consumer spending.
The increase occurred in late March; because of the timing of the hike, it will not have a large impact on March’s numbers. Consumers typically take longer to switch their spending habits. The retail sales report also doesn’t account for the industries that have already experienced the brunt of the increased rates such as housing.
Instead, people can look towards sectors such as the automotive industry in April’s report to begin to see the impact of these hikes.

People Are Going Out to Eat More

The pandemic has been looming over a number of people’s heads for over two years now; for a while, many people refrained from indulging in services such as getting  a haircut or booking a trip to a hotel because there was no longer a need or ability to. However, society has successfully made it to a chapter where many people have returned to the office and restrictions on most social activities have been lifted for several months now. 
In Thursday’s report, this shift in lifestyle will show as the food and beverage industry experiences a notable amount of growth. People are wanting to go outside and the growth in sales will show that rising costs will not stop that for the next few months.
“We don't expect a full return to prior behavior. But we do expect it to be trending that way through 2022,” said Michael Englund, Chief Economist at Action Economics, LLC

Growth In Sales Will Taper Off as Government Support Dwindles

Economists expect that March’s report will experience a minimal amount of growth compared to last year’s report. This is because last year, a large portion of the population was supported with government funds such as the extended unemployment benefits and the child tax credit. These programs have been discontinued in September and January respectively and the savings boom that came from it is also ending. 

The absence of these programs will impact the amount of disposable spending that can occur as people resume spending towards services and have less to put towards goods.

An Unclear Picture Of How The Economy Is Doing 

Whatever the numbers look like on the report tomorrow, the numbers will hold little meaning on how well the economy is doing on its own. 
The retail sales report accounts for consumer spending in ‘nominal figures’ meaning that these numbers do not account for inflation. With inflation at 8.5%, the highest it has been in over 40 years, a report like this may report growth despite consumers maintaining their spending habits.
That being said, tomorrow’s report should be taken with a grain of salt unless compared with other economic indicators, says Berson who looks at a range of reports to draw conclusions.